Week 6 Final Paper

11

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Just-in-Time and Lean Systems

Learning Objec�ves A�er comple�ng this chapter, you should be able to:

Understand the rela�onship among just-in-�me, lean systems, and the Toyota Produc�on System. Explain the basic concepts of just-in-�me (JIT). Describe the "pull" system. Explain how JIT simplifies a firm's opera�ons. Discuss the rela�onship between JIT and planning. Apply the concept of JIT to service opera�ons. Discuss strategic planning and JIT.

11.1 Foundations of Just-in-Time and Lean

The Japanese automaker Toyota is o�en credited with the conceptual development of just-in-�me (JIT) produc�on, but the roots of this system can be found in the development and applica�on of the assembly line where work is organized in a con�nuous flow, and inventory and wasteful ac�vi�es are removed. Toyota claims that the original concept of JIT was used by Henry Ford, who applied these concepts to improve automobile assembly more than 100 years ago. While the United States grew lax in its applica�on of these concepts a�er World War II, the Japanese grasped these ideas, merged them with Deming's (1986) and Juran's (1988) quality management, and incorporated this approach into its supply chains. This was called the Toyota Produc�on System, and it is the basis for JIT. JIT is used by many organiza�ons throughout the world, including GM, Apple, and IBM. The basic techniques underlying JIT have now evolved into the concept known as lean systems, which was conceptualized by Womack and Jones (1990). It is reasonable to argue the development of JIT and lean stand on the shoulders of the Toyota Produc�on System and the Ford Motor Company. Today, JIT and lean systems are being implemented through the en�re supply chain, making these techniques powerful tools for cu�ng costs, reducing �me, and improving quality.

When the success of Japanese companies first brought a�en�on to JIT, many people outside of Japan immediately classified it as an inventory control system. JIT was o�en referred to under other names, including "stockless produc�on" and "zero inventories." Lowering levels of inventory is one possible approach to implementa�on, but JIT can also be much more than another system for controlling inventory. Some companies that are strong believers in the en�re JIT philosophy find it amounts to a philosophy of how an en�re company should operate. Thus, JIT is defined as a philosophy of opera�on that seeks to maximize efficiency and eliminate waste in any form. In its broadest sense, JIT influences all parts of a company, including purchasing, engineering, marke�ng, personnel, and quality control, and can determine the rela�onships among the company, its suppliers, and its customers. The benefits of JIT can carry far beyond cost savings due to reduced inventories, extending into a company's strategic planning. Today, this broader view of JIT is o�en referred to as lean manufacturing, lean thinking, lean systems, or, simply, lean.

Oil refineries use a con�nuous flow process in which work-in-process inventories are kept to a minimum, and material flows smoothly from one processing step to the next.

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11.2 Fundamental Concepts of JIT

Experts disagree on the key components of JIT because implementa�on can range from a very narrow emphasis focusing on inventory control or shop floor scheduling to a broad organiza�onal philosophy. The following items are generally accepted components of JIT.

Generating Flow

Inventory represents a huge capital investment that �es up money a company could put to other uses. By decreasing inventory investments, a company could free up capital to purchase be�er equipment, develop new product lines, or give its employees raises. Any unnecessary inventory deprives a company of more beneficial ways to use the money.

For an automobile manufacturer, elimina�ng unnecessary inventory may mean that no inventory of �res would be kept in stock. Instead, the four �res for a car would arrive at the moment they must be mounted on the rims, just before being put on the car as it rolls down the assembly line. No inventory of �res is required. Further, there would be no inventory of any other parts for the car. Instead, parts would be delivered from suppliers or from the manufacturing opera�on for those parts only when needed and only in the quan�ty needed for that car. Throughout the en�re opera�on, there would be no unnecessary inventory—only work-in-process inventory des�ned for immediate use at the next processing opera�on.

How would this work in theory? A worker finishes a radiator part and immediately hands it to another worker, who combines that part with others to produce an assembled radiator. As soon as the radiator is finished, it gets handed to another worker, who puts it on an automobile rolling down the assembly line. All along the way, the same thing happens as parts and subassemblies are produced only when needed and only in the quan��es needed for immediate use.

JIT allows materials to flow in an assembly process similar to a con�nuous flow process, such as at an oil refinery. At a refinery, work-in-process inventories are kept to a minimum, and material flows smoothly from one processing step to the next. The difference is that a company's objec�ve with JIT is to make this smooth, uninterrupted flow move from the last �er in the supply chain to the final customers.

Figure 11.1 presents a useful analogy. In this figure, parts, materials, subassemblies, and final products are likened to water. If there are many pools in which this water can collect as inventory, then the flow will not be smooth and swi�, but will be like

a series of quiet, stagnant ponds, as shown at the top of Figure 11.1. An objec�ve of JIT is to eliminate these ponds and produce a smooth, rapid flow—like the mountain stream shown at the bo�om of the figure.

Figure 11.1: Water analogy of JIT

This same concept applies to most service opera�ons. For example, when a university processes an applica�on to its graduate school, the paperwork, whether it is paper or electronic, follows a path for review and approval. In a poorly designed process, the paperwork suffers delays wai�ng for addi�onal informa�on or decisions to be made. In a well- designed flow process, the parts of the organiza�on work together in a coordinated manner to make this decision quickly. There are only a few hours of real work to process, review, and approve or reject an applica�on. In a poorly designed process, this can o�en take months from the �me the applica�on is received un�l the decision is made.

Simplified Production Processes

Elimina�ng inventory is o�en much more difficult than it may seem. A certain machine may take five hours to readjust (set-up �me) whenever the company switches from making one part to making another. If only one unit is made at a �me, more �me will probably be spent readjus�ng the machine than making parts. The answer to this problem is to

simplify—either by buying a more general-purpose machine that can easily be changed from making one part to making another, or by simplifying the readjustment process in some way. Companies that use JIT o�en have many general-purpose machines and have developed simple ways of switching them from making one part to making another. O�en, this set-up �me can be reduced to less than a minute. Some companies have eliminated set-up �me altogether by using one simple machine for each part, instead of trying to do all parts on one complex, mul�purpose machine.

Another problem encountered in JIT has to do with the movement of materials. In the previous sec�on, one worker handed a finished radiator part to another worker, who assembled the finished radiator. But, what if those workers are on opposite sides of the plant and an elaborate automated handling system has been used to move the radiator? A large amount of inventory builds up in the factory. Again, the answer is to simplify the process by moving the workers so they are in close proximity. This eliminates the need for an expensive material handling system and reduces the level of inventory. Many companies implemen�ng JIT have eliminated complex material-handling systems and rearranged the plant so that workers could simply move parts by hand from one opera�on to the next.

Most companies using tradi�onal purchasing methods will buy large quan��es from their suppliers once every month or every couple of months. These transac�ons usually involve much paperwork, such as purchase requisi�ons, packing slips, bills of lading, and invoices for each order. A company using JIT, which some�mes places orders with suppliers several �mes per day, would be deluged in paperwork under this tradi�onal approach to purchasing. Many companies have used blanket purchase requisi�ons, which authorize a vendor to supply a certain total quan�ty spread out over a certain �me to avoid such a problem. Individual orders may be ini�ated by phone calls, electronic data interchange, or by some other method.

Uncovering Problems Buried by Inventory

While inventory reduc�on is the most obvious aspect of JIT, its most valuable benefit is that it forces a company to uncover problems and inefficiencies in its opera�ons. To see why, consider the electric power supplied to a home. The flow of electricity occurs only in response to a need for power, such as turning on a light. There is no inventory of electricity anywhere between the house and the genera�ng plant; the electricity is supplied just in �me. Now suppose that something occurs between the genera�ng plant and the house— maybe a wire goes down or a transformer malfunc�ons. No ma�er what the problem, the homeowner becomes aware that something is wrong when there is no electricity. If this happens to enough people, the electric company will be deluged with calls; a crew will be dispatched immediately to find the problem and remedy it. The situa�on is very similar for a company opera�ng under JIT. With li�le or no inventory, any problem that disrupts the flow of work will become immediately obvious to everyone as work centers must shut down for lack of materials. A�en�on will immediately focus on the problem, and all effort will be devoted to solving that problem. In addi�on, because it is realized that produc�on will again be disrupted if the problem re-occurs, effort will be devoted to providing a long-term solu�on, not just a quick fix.

The water analogy used in Figure 11.1 also illustrates this point. As before, parts and materials are represented by water. But in this example, poten�al problems are the rocks below the water, as shown in Figure 11.2. Some of these rocks may be barely visible from the surface of the water. These are the problems that are present in the plant today. Other rocks may be totally obscured by the water. These rocks may represent quality problems, machine-breakdown problems, or any other problem that can disrupt produc�on. If the water level is lowered, that is if inventory is removed, the rocks become visible, which means that these problems surface, and disrupt the flow in the plant. It is best to iden�fy the problems first, remove them, and then decrease inventory.

Figure 11.2: Problems hidden by inventory

An Emphasis on Quality

Quality is one problem that can be especially disrup�ve in a JIT system. Refer to the example of the radiator assembly opera�on in an automobile factory. Suppose the worker making radiator parts turns out a defec�ve part. When the next worker tries to assemble that part on the radiator, it won't fit. This immediately causes a problem because there will now be no assembled radiator to put on the next car. The assembly line will come to a halt because of one bad part.

If these parts were produced in large batches, then the worker assembling radiators could place the bad part in the defec�ve pile with other bad parts and reach into the batch for a good part. There would be no immediate signal that a problem exists and no incen�ve to change anything or to improve the process to avoid making defec�ve parts. Produc�on decisions that generate large amounts of work-in-process inventory allow a company to con�nue producing and never realize a quality problem exists. The company does not realize how much be�er and more efficiently it could be opera�ng.

Improvement as an Organizational Philosophy

The objec�ve of elimina�ng waste in any form is difficult to achieve. No company will ever reach the goal of elimina�ng all waste, but it remains a goal toward which companies should con�nuously pursue. A company opera�ng under JIT is constantly working to improve efficiency, reduce waste, and smooth the flow of materials. When working toward those ends, the company will uncover any problems and aim to find be�er ways to produce its products.

Companies that have been extremely successful with JIT have not stopped trying to improve. These companies extend some aspects of JIT to their suppliers—and to their customers —once their own systems have been put in place. Addi�onally, efforts have been undertaken to keep demand at the constant, uniform rate that is needed for a smooth flow from supplier to customer. Con�nuous improvement is also a component of total quality management.

Instead of pushing materials through processing based on a preplanned schedule, JIT uses a "pull" system moving parts and materials based on actual needs at successive work centers.

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11.3 The JIT "Pull" System

Although the differences and similari�es between material requirements planning (MRP) and JIT are discussed in detail later in this chapter, there is one very important difference that is relevant here. Most tradi�onal produc�on systems, including MRP, use what is called a schedule "push" approach to move materials through the system. A push system moves materials through the processing opera�ons based on a schedule. An order to produce a part or product enters the system at a scheduled �me, and is pushed from one work center to another according to that schedule.

MRP is an improved push system in the sense that each order release is based on requirements generated by the master schedule. Thus, materials are pushed through the system in an effort to meet that schedule. With MRP, decisions are made to ensure that the outcomes on the master schedule, which occur at some future �me, are actually achieved.

JIT uses a "pull" system to move parts and materials. Instead of pushing materials through processing based on a preplanned schedule, a pull system moves materials based on actual needs at successive work centers. Thus, if work center A provides parts to work center B, work center A will produce only in response to an actual need for more parts at work center B. This pull system concept starts with customer demand, which pulls finished products from the company. As those finished products are made, they pull the appropriate materials through processing. Materials and parts are also pulled from vendors and suppliers.

One way of comparing a push system and a pull system is with the analogy of a rope. The material moving through the various produc�on processes is considered the rope. Under MRP, coils of rope (batches) are created at various machines and work centers throughout the plant. MRP is used to ensure that all coils of the rope are moved forward through the processes at the appropriate �me, preven�ng the coils from building up at any one spot. With JIT, the rope is not coiled, but remains as one long piece running through all processes. To move the rope forward, one simply has to pull on the end; there is no need to coordinate movement of coils because there are no coils, as shown in Figure 11.3. The key element of a pull system is some means for communica�ng backward through the produc�on process whenever more parts or materials are needed at "downstream" work centers. In some instances, workers can determine visually when the next work center needs to be supplied. Work centers, however, are o�en too far apart physically for direct visual communica�on.

Figure 11.3: Push systems vs. pull systems

Kanban Systems

Within a JIT system, there are several ways that pull signals can be communicated. One of the best known is a method developed by Toyota based on cards, or kanban (con-bon), as they are called in Japan. Kanban is a Japanese word that can refer to a sign or a marker and means "visible record." (Note that the word kanban is like the word "sheep" in that the plural has no le�er s on the end.) In the opera�ons context, the word kanban refers strictly to a card that is used to signal the need for more materials, parts, or subassemblies at downstream opera�ons (see Figure 11.4).

Figure 11.4: Example of a kanban card

Standard Containers of Parts

Theore�cally, the ideal situa�on with JIT is to produce one unit at a �me. However, this usually is not possible. For instance, the travel �me to and from a supplier may be much longer than the �me between requirements for the part from that supplier, or there may be an imbalance in the produc�on rate between a par�cular work center and the preceding work center that supplies it. In these and other cases, it is necessary to move containers of parts rather than single units. A kanban is most o�en associated either with the movement of a container of parts or with the produc�on of parts to fill an empty container. Accordingly, two types of kanban are generally used, the conveyance kanban and the produc�on kanban.

Conveyance Kanban

The conveyance kanban, or C-kanban, is an authoriza�on to move a container of parts or materials. Without it, nothing can be moved. The way a C-kanban works is depicted in Figure 11.5. As the figure shows, any container with parts in it cannot be moved without the C-kanban a�ached.

Figure 11.5: Single kanban system

Many companies, notably Kawasaki in the United States, use only the C-kanban. This single-card kanban system is s�ll an effec�ve way to control inventory. The number of full containers is limited by the number of C-kanban, and inventory at the using work center (work center 2 in Figure 11.5) can be replenished only when a container is emp�ed. Thus, that center 2 cannot possibly hoard extra parts. The feeding work center (work center 1) usually produces a schedule, which may be generated through MRP. This schedule is generally based on the expected day's requirements for work center 2. However, limited storage space at work center 1 is used to shut off produc�on at that work center if parts are not being used at the expected rate (for example, if work center 2 is shut down for some reason). In order for the single-card kanban system to work, the following rules must be observed:

1. Containers holding parts can be moved only when a card is a�ached. 2. Standard containers must always be used.

Highlight: ProMedica Uses Kanban to Manage Inventory at its Hospitals

ProMedica manages approximately two dozen hospitals in the Midwest, and it uses a two-bin kanban system to manage much of its inventory. This system is used for everything from bedding to bandage to surgical gowns. Pharmaceu�cals and high-cost surgical items such as hip sockets are not part of this system, at least not yet.

The process works in the following way. Each item is stored at the hospital in two bins. A quick glance at the bins tells the order taker whenever one bin is empty and an order should be placed with Pro-Medica's medical supplier, Seneca. The barcode on the bin is scanned, and the order is placed. The larger hospitals in the system receive two shipments each day from its medical supplier. As a result, the amount of on-hand inventory at hospitals is kept low. This is an advantage not only because inventory investment is reduced, but also because space is at a premium and the available space has very high opportunity costs. ProMedica is a good example of how JIT works in service businesses.

Produc�on Kanban

Some companies use a two-kanban system that combines the conveyance kanban with a produc�on kanban. The produc�on kanban, or P-kanban, is used to authorize the produc�on of parts or subassemblies. The two-kanban system, which combines the C-kanban and the P-kanban, is known as a dual-card kanban system. Its major advantage over single-card kanban is that it allows greater control over produc�on, as well as over inventory, because both produc�on and withdrawal of inventory are directly connected to need. In contrast, a single-card system bases produc�on on a plan, which may lead to excess inventory if actual need does not match the plan.

The flow within a plant can be compared to creeks that run into streams and eventually converge into rivers. Using this analogy, streams could be made up of processing opera�ons for individual parts that flow together into subassemblies, which are then joined together as finished products.

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11.4 Effects of JIT on Production

The objec�ve of JIT is to eliminate the pools of inventory and obtain a smooth, steady flow of materials from supplier to customer. Within a plant, that flow is much like creeks and rivulets that converge into streams—and streams that eventually converge into rivers. In this analogy, the streams could be made up of processing opera�ons for individual parts. Those parts flow together into subassemblies, which are then eventually joined together as finished products. The objec�ve of JIT is to keep all those rivers and tributaries flowing smoothly without any pools of inventory. The following sec�ons describe some ways to achieve that objec�ve.

Facility Layout

The top of Figure 11.6 shows each part moving from one machine area to another. This requires a lot of material handling and also encourages the produc�on of each part in large batches. But when the machines are rearranged, as shown at the bo�om of Figure 11.6, each part can flow directly from one processing step to the next. This type of layout also allows the produc�on of small batches because each group of machines is dedicated to just one part. Also, there will not be interference between two parts that must both be processed on the same machine. It is this type of interference that leads to long queues of parts to be processed. McDonald's, Domino's Pizza, and many other fast-food restaurants are organized as shown in the "A�er" part of the diagram in Figure 11.6. The key ac�vi�es—shaping the crust, adding the toppings, baking the pizza, and removing and boxing it— flow smoothly with a minimum amount of set-up �me, handling, and movement. The process flows efficiently and without waste because of the layout.

Figure 11.6: Rearranging machine layout for smoother flow

Reducing Set-up Time

Set-up �me is the �me it takes to readjust a machine or group of machines a�er making one par�cular part un�l acceptable units of another part are produced. Set-up �me may involve changing the tooling, adjus�ng the equipment, checking that the new part is being made to specifica�ons, and then readjus�ng the equipment if it is not.

Set-up �me is an important considera�on in JIT because it may disrupt the smooth flow of materials. For example, a group technology (GT) produc�on system may be used to make several different, but related, parts. The idea behind GT is that each part follows the same essen�al processing sequence. However, each part may require different tooling in the machines or a different machine se�ng. By keeping similar parts together, set-up �me is reduced and the flow of materials is not interrupted. If excessive �me is taken for the set up, then the flow of materials will be stopped—causing downstream processing opera�ons to pause un�l the flow resumes. If "upstream" opera�ons con�nue unchecked, unnecessary inventory will build up in the system, much as water builds up when a dam is placed across a river.

Thus, another objec�ve in a JIT system is to reduce set-up �me as much as possible. Companies should:

Closely examine each set up to determine steps that can be eliminated or improved by changing the process. Prepare as much ahead of �me as possible. All tools and equipment needed for the set up should be readily available in predetermined loca�ons. Try to do as much set up as possible with the machine running. Stop the machine only when absolutely necessary. Use special equipment to shorten down�me whenever possible. Prac�ce and refine the set-up procedures. Mark machine se�ngs for quick adjustment.

Table 11.1 indicates the set-up �me reduc�ons that several companies have been able to achieve by using the procedures described above. These changes did not occur overnight, but their effects were drama�c. Some companies felt ini�ally that it was not possible to reduce set-up �mes by such a large amount, but Table 11.1 shows what can be achieved with hard work and dedica�on.

Table 11.1: Set-up �me reduc�ons

Many fast-food companies empower and engage employees by training them to do a variety of tasks in order to meet shi�ing demand pa�erns.

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Company Machine Original Set-up Time Reduced Set-up Time

Toyo Kogyo Ring-gear cu�er 8 hrs. 10 min.

Hitachi Die-cas�ng machine 1.5 hrs. 5 min.

Omark Industries Punch press 4 hrs. 3 min.

General Electric Stamping press 50 min. 2 min.

Black & Decker Punch press 1 hr. 1 min.

As companies have sought ways to reduce set-up �mes, one area that is receiving more a�en�on is product design. In the past, design engineers tended to worry li�le about how the product was made. However, challenges concerning the ease of produc�on have begun to a�ract the a�en�on of designers, and set-up �me reduc�on is one of those challenges. It is may be possible to reduce set-up �me, or even eliminate set ups altogether. A company can reduce the number of different parts used to produce a piece of equipment by using the same parts in different final products. For example, Black & Decker might use the same electric motor in several different drills and power saws. A company can also reduce differen�a�on among parts so the set-up �me is greatly reduced.

Motorola and other companies that manufacture electronic products have found that set ups can be eliminated by using a common circuit board for different products. Previously, the automated equipment that inserts parts into the circuit boards needed an extensive set up every �me it processed the board for a different product. These companies need to change only the components and inser�on pa�ern, both of which are easy to modify, by using one common board with different components.

One ques�on that may be asked at this point is: "How short must set-up �me be?" The answer is that it depends. Some opera�ons may have enough slack that the exis�ng setup �me is not disrup�ng material flow. In those cases, nothing needs to change. In other opera�ons, set-up �me may cause problems. The goal is to try to understand what problems would surface if inventory is removed from the system. If those problems involve set-up �me on a machine, then that set-up �me should be reduced.

Total Preventive Maintenance

Equipment failure is another possible source of disrup�ons to the smooth flow in a JIT system. Machines that are not properly lubricated or maintained can produce defec�ve parts without breaking down. To prevent either of these results from occurring, companies have adopted total preven�ve maintenance (TPM), also called total produc�ve maintenance.

TPM involves three main components:

1. An emphasis on preven�ve maintenance: Efforts are undertaken to avoid equipment breakdowns by frequent inspec�on, lubrica�on, and the use of proper opera�ng techniques. 2. The alloca�on of �me each day for maintenance: Companies some�mes allow one en�re shi� for maintenance, or set aside specific �me during each shi�. 3. Operator responsibility for maintenance: Instead of assigning this responsibility to a maintenance department, operators are trained to perform all but the most complicated

maintenance on the machines they operate.

Employee Empowerment

Many companies, especially those that are highly unionized, find their workforce management procedures complicate the opera�ons func�on. Empowering employees to take more responsibility and exercise more authority in the workplace can eliminate many workforce management problems. For example, if employees are able to perform more than one job, resources can be shi�ed as needed or one employee can operate several machines. Many fast-food restaurants use this approach to meet shi�ing demand pa�erns.

Employee empowerment also means training employees to work in small problem-solving groups and allowing those groups to solve problems associated with the produc�on process. If the employees who must produce a good or service are the same employees who work to improve the produc�on process, then the process is greatly simplified and be�er solu�ons will result.

11.5 Planning in JIT Systems

It may seem that JIT is a complete departure from the planning concepts introduced earlier in this text. Actually, companies that use JIT successfully follow most of the planning steps that were men�oned previously, from strategic planning to master scheduling. In addi�on, it is possible to combine JIT and MRP; but some changes must be made in the MRP planning and scheduling process under JIT.

Operations Planning and Master Scheduling

Planning and scheduling are easier with JIT because requirements for parts and materials can be �ed directly to each unit of the end item. If 50 units of the end item will be made during a given day, then enough parts and subassemblies must be ordered for that day to make the 50 units. Because JIT requires having only what is needed when it is needed, parts are usually not ordered in large batches. Instead, a steady stream of material in small batches is maintained at a rate that will match the produc�on of end items.

The Aggregate Plan

The aggregate produc�on plan for a company using JIT is nearly the same as that for any other company that doesn't use JIT, except that the JIT planning horizon may be somewhat shorter. Produc�on is generally planned by product families on a monthly basis for about one year into the future. This plan is used for determining general workforce requirements and overall capacity needs, as well as for ordering any parts or materials that have extremely long lead �mes.

The Master Schedule

The details of a master schedule for a company using JIT will be the same as that for most other companies that follow a master schedule. That is, planning is usually done in weekly �me buckets and by individual end items or product op�ons. The master schedule is usually developed with a 2- to 3-month planning horizon instead of the 6- to 12-month horizon used for MRP. The master schedule is also frozen for approximately one month into the future under MRP, whereas this �me period may be less with JIT due to the shorter lead �mes.

In an MRP environment, the master schedule is what drives the MRP deriva�on of planned order releases. However, in JIT, the pull system o�en eliminates this need for order release planning because parts and materials will be produced only in response to a downstream signal. The master schedule is used only when items with long lead �mes must be ordered. Thus, in a JIT system, the master schedule is primarily an intermediate step in reaching the final assembly schedule.

The Final Assembly Schedule

The final assembly schedule is an exact statement of the final products that are to be assembled. The final assembly schedule is stated on a daily basis, but most o�en goes only about a week into the future. The final assembly schedule indicates the quan��es of component parts that will be made each day, because lead �mes are usually short in a JIT environment. The JIT philosophy of elimina�ng unnecessary inventory has a major impact on the final assembly schedule. In addi�on to elimina�ng work-in-process inventory, it is important that any unnecessary finished-goods inventory be eliminated. However, this is hard to do when a company makes more than one finished product.

The approach that has been followed in tradi�onal manufacturing systems is to make a large number of one product before switching over to another. It means that the inventory of each finished product will increase when that item is being produced, but then decrease again when other products are being made, as shown in Figure 11.7.

Figure 11.7: Finished-goods inventory with long produc�on runs

This approach is inefficient because it leads to high levels of finished-goods inventory at some �mes and very low levels—with the possibility of being unable to sa�sfy customer demand—at other �mes. A be�er approach is to level the final assembly schedule. A level assembly schedule means that the number of units of each end product produced at a �me is as small as possible, and that total daily produc�on of each matches average daily demand during the scheduling horizon. That is, if the scheduling horizon is 20 working days, and demand during that period is expected to be 300 units, a level schedule would require that 15 units (300/20) be produced each day.

A level assembly schedule requires that the smallest reasonable number of units of each end product should be produced at a �me. Thus, if 15 units of a product are to be made during a given day, those 15 units should be spread throughout the day. This even spread is achieved through mixed-model sequencing.

Mixed-Model Sequencing

Mixed-model sequencing is a procedure for maintaining the uniform produc�on required by a level assembly schedule. If a company makes several different end items (different products or different models of the same product), it is desirable to spread the produc�on of each evenly throughout each day. However, in order to keep the system running as smoothly as possible, there should be some con�nuity in the sequencing of those end items. For example, if four different products (A, B, C, and D) are produced, then the ideal

If a company makes several end items such as Apple's different iPod models, it is desirable to distribute the produc�on of each model evenly throughout each day.

Peter Belanger/PR NEWSWIRE/AP Images

schedule would produce them in some sequence such as A-B-C-D and to repeat that same sequence throughout the day for each day in the planning horizon. But some�mes demand for one product will be greater than for others. In that case, the sequence may need to be varied somewhat.

Problem

A company produces three products. Expected demand for each during the next 20 working days is as shown below:

Product Expected Demand Daily Requirements

A 420 420/20 = 21

B 280 280/20 = 14

C 140 140/20 = 7

The daily requirements are obtained by dividing expected demand over the planning horizon by the number of working days in the �me horizon. To maintain a level schedule, the company needs to plan so that each product's daily requirements will be produced every day, and evenly spread throughout the day, if possible. It is also desirable that a set sequence of products be made, and that this sequence be repeated throughout the day.

The trick in solving this problem is to find the largest integer that divides evenly into each product's daily requirements. In this example, the number is seven. Thus, the company should develop a sequence that will be repeated seven �mes each working day.

Product Daily Requirements/7

A 21/7 = 3

B 14/7 = 2

C 7/7 = 1

The result of dividing the daily requirements for each product by the largest integer that divides into each evenly is the number of �mes each product must be repeated in the sequence. Thus, product A should appear three �mes, product B twice, and product C once. Developing the sequence takes some trial and error, but the following is one possibility that would sa�sfy the company's objec�ves:

A-B-A-B-A-C

This sequence would be repeated seven �mes each day to produce the required 21 units of product A, 14 units of B, and seven units of C, while s�ll leveling the assembly schedule.

It should be noted in the above example that the mixed-model sequence produced is not the only one possible. Such a sequence would smooth out the produc�on, but could also cause problems due to excessive changeovers. When the cycle �me is short, it may be desirable to produce more than one unit of each end product at a �me. Thus, the following sequence would also be acceptable for short cycle �mes:

A-A-A-B-B-C

There may be restric�ons that jus�fy producing even more units of each product at a �me. For example, these products may be packed 10 per carton for final shipping. In such a case, it could be more efficient to produce 30 of A, 20 of B, and 10 of C at a �me, instead of allowing par�ally filled shipping cartons sit idle. Regardless, the objec�ve is to smooth out produc�on by producing each item in the smallest reasonable quan��es, given exis�ng constraints.

Calcula�ng Cycle Times

The purpose of obtaining a level assembly schedule is to smooth out the produc�on of each end item so that it will closely match demand. A level schedule also smoothes out the requirements for component parts that go into each finished product. This smoothing makes the pull system work be�er because demand for each part will be fairly uniform throughout the day, instead of occurring in batches, as if each finished product were made in large batches.

The flow of component parts must be adjusted to match the rate at which finished products will be produced. For example, if one unit of product C is made every hour, it is not helpful to have a machine that makes parts for product C turning out one every two hours—or even one every half hour. The goal is to match the produc�on rate of all components

to the final assembly schedule. This is done through cycle �mes. Cycle �me is a measure of how o�en a par�cular product is made. For example, automobile assembly lines usually have a cycle �me of approximately one minute. One new car rolls off the line every minute. The cycle �me of any product can be calculated as follows:

Cycle �me = working �me per day/units required per day

Problem

For the preceding example, the cycle �me is calculated by using the formula given above. Suppose the plant is in produc�on for seven hours (420 minutes) each day, and it must produce a total of 42 units each day (21 of A, 14 of B, and 7 of C) to match daily demand. The cycle �me will be:

420 minutes/42 units = 10 minutes/unit

This calcula�on can be extended to each of the individual products in order to determine how o�en each unit will be produced, based on a mixed-model sequence.

Product Daily Requirements Cycle Time

A 21 420/21 = 20 minutes

B 14 420/14 = 30 minutes

C 7 420/7 = 60 minutes

This means that one product A will be produced every 20 minutes, on the average, throughout the day by using the completely level sequence developed in the preceding example. In order to make this possible, the people and machines that supply parts and subassemblies for product A must also be balanced to produce with a cycle �me of 20 minutes. Likewise, the en�re system must be coordinated to produce one product—either A, B, or C—every 10 minutes. In some cases, this may mean that set-up �mes must be reduced, or that more machines must be added. It can also mean that some machines will not produce at their capacity. It is much more desirable in a JIT system for machines to sit idle than to produce inventory that is not needed. Ideally, all resources should be used as efficiently as possible, which may mean finding ways to use the same machine to make several different parts. This increases the efficiency of the machine.

11.6 JIT in Service Operations

Although JIT originated in manufacturing, and most of the ini�al implementa�ons occurred there, service organiza�ons are now widely adop�ng many of its basic ideas. In fact, service organiza�ons may have an advantage because of their lack of work-in-process and finished goods inventories. For example, retailers are focusing on maintaining smaller inventories by being able to replenish their inventory more quickly and in smaller quan��es. Insurance companies are finding ways to eliminate unnecessary steps in their claims processing procedures so that customer claims are processed more quickly. Airlines are using yield management to level the demand for their flights. The JIT techniques that are most immediately relevant to services include elimina�on of waste in any form, such as unneeded steps in a process to review applica�ons for insurance or improving the produc�vity of people who are reviewing mortgage applica�ons.

Simplified Production Process

Service opera�ons o�en differ from manufacturing because customers are more directly involved, and are o�en ac�ve par�cipants, in the produc�on process. For example, ATMs allow customers to enter transac�on informa�on formerly entered by bank tellers. Because most customers are not trained employees, the process must be as simple and obvious as possible.

Uncovering Problems Buried by Inventory

Despite that services o�en have no finished-goods inventory, they s�ll may have inventories of supplies or even work-in-process, as with loan applica�ons in a bank. Those inventories can hide problems just as easily as inventory in a factory can. In fact, recent studies have shown that responding quickly to customer requests is becoming an important order winner for service opera�ons. Service organiza�ons can work toward providing the service when the customer wants it by uncovering problems through reduced inventory. Progressive Insurance has made great strides by reducing the �me it takes to apply and receive approval for insurance. Quickly responding to the customer with a decision means a higher yield from the total number of applica�ons because customers do not become disillusioned by the process and do not have as much �me to consider other op�ons. The forms, either paper or electronic, wai�ng to be processed are the service opera�ons equivalent to inventory.

Value Stream Mapping

Value stream mapping is a technique used to analyze the flow of materials, ideas, and informa�on to understand how processes func�on. Each ac�vity in the process is defined as value-added or non-value-added. For example, in health care, performing an ultrasound that is needed to diagnose an illness adds value, or in a restaurant, grilling the main course adds value. Alterna�vely, if the person performing the ultrasound or preparing the food must make a trip to the storage closet or the refrigerator to secure items that should be available, those ac�vi�es do not add value. That is, the pa�ent or customer is willing to pay for the tes�ng or the grilling because it has value for them. They see no value in taking the �me to find items that are needed to do the work. Value stream mapping allows the organiza�on to iden�fy the non-value-adding ac�vi�es or items and reduce or eliminate their impact on cost and �me required to deliver the service, thereby delivering greater value to the customer.

Value stream mapping is useful for both manufacturing and service opera�ons. In service opera�ons, it allows organiza�ons to understand how many different people and departments are involved, what their roles are, and how long tasks take to perform. The value stream map of the admissions process at a hospital could be an important tool for understanding the cost, efficiency, and customers' sa�sfac�on with this process. The basic steps are to:

1. Iden�fy the product or service that should be mapped. 2. Draw a rough, current state, value stream map, which shows the current steps, delays, and informa�on flows required to deliver the target product or service. 3. Es�mate the cost and �ming at each point, as well as the value added. 4. Assess the current-state value stream map to understand its flow and points where waste occurs to determine where processes can be improved. 5. Create a future-state value stream map using a team of people. 6. Prepare a plan to implement these improvements. 7. Work toward this future state.

Strategic planning is based on a firm's strengths and weaknesses, the threats and opportuni�es in the external environment, and the type of product the company produces.

iStockphoto/Thinkstock

11.7 Strategic Planning and JIT

Strategic planning is a vital element for any organiza�on. The strategy is based on the firm's strengths and weaknesses, the threats and opportuni�es in the external environment, and the type of product (goods and services) the company produces. The products are created by using the firm's strengths in ways to cope with the threats and take advantage of the opportuni�es present in the environment. However, JIT offers some very special compe��ve opportuni�es to the company that uses it. Within this process, the firm a�empts to mi�gate its weaknesses or to transform them into strengths. The implementa�on of JIT or lean thinking is a way to help an organiza�on build its capabili�es, in many cases transforming weaknesses into strengths. The following list notes some of the opportuni�es:

Elimina�on of waste People u�liza�on Cost reduc�on Quality and reliability Product flexibility Volume flexibility Delivery dependability

Elimination of Waste

Elimina�ng waste is a predecessor to JIT and lean thinking, and a fundamental component of JIT (as well as the Toyota Produc�on System). An important step when elimina�ng waste is to iden�fy which steps add value and which do not. One simple way to do this is to ask the customer which ac�vi�es are valuable. A customer may be willing to pay a lawn care company for an extra service such as edging the driveway, or a manufacturer that adds a power wash cycle to its dishwashers. Customers are not willing to pay for delays when an employee is late and the rest of the lawn crew must wait or for building and storing dishwasher inventory.

Waste can be categorized in two ways as necessary, but non-value-added or pure waste. It is always difficult to determine the exact amount of each. For example, with current technology some inventory is needed to make the system work. The dishwasher manufacturer will have some work-in-process inventory that is ac�ve in its assembly line because the dishwasher moves from sta�on to sta�on so that the line is filled with par�ally completed dishwashers. Also, some finished goods inventory is needed at the retail level so customers can evaluate the product and goods in transit between the manufacturer and the retailer. Companies must determine how much inventory is needed to make the current system work, and how the system can be changed to reduce the amount of inventory even further.

The following list includes seven areas of waste to consider:

1. Over-Produc�on: producing more than customers demand. The most common cause is produc�on of large batches of products because set-up �me and costs are high. Rather than address the root cause and lower set-up �me and costs, firms produce more than they currently need and store the rest for future use. This leads to all of the costs associated with storing inventory. In addi�on, the firms run the risk of storing inventory that is defec�ve because the batch was not produced according to specifica�ons. Inventory may become obsolete when a part design changes before that inventory is consumed.

2. Wai�ng: occurs when a good is not being transported or processed. In manufacturing opera�ons prior to JIT, it was common for a part to be wai�ng for processing more than 90% of the �me. In service opera�ons, for example, pa�ents wait for treatment in a medical center or emergency room, or customers wait for paperwork to be processed at an insurance company.

3. Transporta�on: moving a product or a pa�ent from one point to another. Some part of transporta�on is essen�al, such as moving the par�ally completed dishwasher from one point in the assembly process to the next, or moving a pa�ent to a treatment center or surgery. While it does not make sense with current technology to complete surgery in a pa�ent's room, there are ways to bring some treatments to the pa�ent that lower costs and increase customer sa�sfac�on.

4. Over-Processing: occurs when more work is done than is required by the customer. This includes using tools that are more precise, complex, or expensive than required. Customers are unwilling to pay for this extra service so they are either forced to pay more or to accept more than they want. One example is cable services that offer groups of channels that are bundled. People are forced to pay for channels they do not watch. Why should customers who don't like or watch sports be required to pay for sports channels?

5. Inventory: represents items that are stored for future consump�on. Much has already been discussed about inventory in this chapter and throughout the book. 6. Mo�on or Movement: ac�vi�es that do not add value, such as excessive walking by a manufacturing employee or a service worker, or searching for items that are lost, such as

paperwork. The �me a machine operator wastes walking to the tool room or storage area for a fixture or a component could be far be�er u�lized. Keeping needed items nearby helps to reduce this form of waste.

7. Defects: things such as scrap or rework that add cost, but no value. Defects can include goods or services that do not meet specifica�ons, such as a house entry door that does not close without s�cking, or a carpet cleaning company that must return because the job was not completed properly.

People Utilization

Companies using JIT depend heavily on their employees to solve problems, but u�liza�on of people extends even further. For instance, maintaining the smooth flow of materials o�en means that one employee may have to operate several different machines. This cross training leads to greater worker u�liza�on. Likewise, companies using JIT examine closely any areas where waste may be present. One such area in many companies is the office staff. Efforts are usually made to find ways that managerial jobs can be combined or even eliminated—something few companies have done in the past.

Cost Reduction

The JIT philosophy of avoiding waste leads logically to cost reduc�on. Although the cost savings associated with inventory reduc�on have o�en received the most no�ce, other savings may be more substan�al. For instance, total quality control can reduce material costs substan�ally and save on the labor costs that may have been used to make defec�ve products. A level schedule avoids costly over�me by evenly loading the plant. Likewise, extensive machine maintenance means that down�me will be eliminated, repair costs will be lower, and equipment will last longer. Overall, companies using JIT have been able to achieve much lower costs than their compe�tors.

Quality and Reliability

Total quality management is something that can have several payoffs. In a JIT system, the goal is to eliminate all defects, which means lower costs because scrap is nearly eliminated. At the same �me, customers will be happier because they will be ge�ng higher quality products that are likely to last longer. Producing higher quality products also means fewer returned items and fewer warranty repairs, which also will result in reduced costs. The goal of constant improvement will eventually lead to produc�on of a product that gives the customer greater value at a lower price.

Product Flexibility

JIT produc�on provides a company considerable flexibility in several ways. Producing to a level schedule means that each product is produced each day. Changes in customer demand can usually be accommodated quickly because the system is already designed to change from making one product to making another quite easily. Such is o�en not the case with companies that make long produc�on runs of each product. Low work-in-process inventories also provide added flexibility. With minimal inventories in the pipeline, companies can quickly switch to making different parts.

Volume Flexibility

It may seem contrary to the goal of using a level assembly schedule to smooth produc�on to argue that companies using JIT have more flexibility to change their volumes. Successful JIT implementa�on leads companies to a posi�on in which they have greater capability to respond to sudden surges or drops in demand. Part of this flexibility is related to low inventories. A company with very li�le work-in-process inventory can quickly stop its produc�on in response to a drop in demand. The ability to respond when demand increases is a result of the smooth material flows in a JIT system. Smooth flows generally mean that machines and people are being employed at a steady, uniform pace. When it is necessary to increase output, it is possible to quicken that pace.

Delivery Dependability

All of the strategic aspects of JIT men�oned in this text help contribute to delivery dependability. Improved quality will mean that shipments to customers are not delayed because of quality problems in the product or because of delays caused by defec�ve parts. Product and volume flexibility means that the company is be�er able to respond when customers suddenly change the size or product mix of their orders.

11.8 Lean Systems

The term lean systems is o�en used to describe many of the aspects of JIT. In fact, many people view JIT and lean systems as interchangeable terms that mean the same thing. Others tend to view JIT as a component of lean systems. One reason for the la�er viewpoint is that JIT o�en is defined narrowly as consis�ng of only the pull (kanban) system described in this chapter. However, if one takes a broader view of JIT, then it is similar to lean systems.

Current trends tend to view lean systems as extending beyond JIT, and encompassing the en�re supply chain. While JIT was ini�ally applied to a company and its immediate suppliers, lean systems extended many of the basic concepts of JIT over the en�re supply chain. This is primarily a ma�er of perspec�ve and applica�on. Both lean systems and JIT can focus on elimina�ng non-value-added ac�vi�es from the en�re supply chain. The series of ac�vi�es that add value, through the en�re supply chain from raw materials to the final consumer, are referred to as the value stream. Lean systems focus on applying the basic ideas of JIT to this en�re value stream.

Chapter Summary

JIT and lean are closely related ideas that were built on the Toyota Produc�on System and Ford Motor Company's efforts to apply the assembly line concepts to car produc�on more than 100 years ago. JIT is a philosophy of constant effort to eliminate waste and reduce costs. JIT is classified as a "pull" system because materials are pulled through processing opera�ons as they are needed. This includes standardizing containers and using kanban. The fundamental concepts of JIT include implemen�ng flow produc�on, simplifying processes, uncovering problems hidden by inventory, emphasizing quality, and con�nuous improvement. There are many ways to simplify the produc�on process using JIT including reorganizing the facility layout, reducing set-up �me, applying total preven�ve maintenance, and empowering employees. Planning the JIT system requires organiza�ons to produce each product frequently rather than to produce them in large batches and sa�sfy demand from inventory. JIT is very useful in service opera�ons. Some service opera�ons such as restaurant and wholesale and retail opera�ons have a great deal of inventory and can benefit from that facet of JIT. Other service providers have limited inventory, mostly as secondary items such as supplies. These firms can benefit from other aspects of process improvement. Value stream maps show the points where value is added. JIT is related to the strategic planning process because JIT can eliminate waste as well as improve produc�vity, people u�liza�on, cost compe��veness, quality and reliability, product flexibility, volume flexibility, and delivery dependability. These are important strengths that should be considered as the strategic plan is developed.

Case Studies

Southern Gear Company

The Southern Gear Company manufactures transmissions and speed reducers used in various farm machinery and industrial equipment. The company has been working on implemen�ng MRP for the past three years, but has not achieved the success for which it had hoped. It is now Monday morning as we join the company's execu�ve commi�ee during its weekly mee�ng.

Barry Renter (vice-president of manufacturing): "Look, I know we haven't achieved the results with MRP that we had expected. But, I think that's because we haven't been able to bring inventory under control. We s�ll don't have more than 90% accuracy in our inventory records, and that means that we've run out of parts when the MRP said we should have had enough. That's why I think JIT can help us. It's a way to eliminate the need to maintain accurate inventory records."

Dave Ashley (vice-president of marke�ng): "But Barry, how can we possibly change to JIT when our customer orders jump all over the place? You know as well as I do that one problem we've had in implemen�ng MRP is freezing the master schedule. Our customers expect us to meet their every whim, and they expect to be able to change their orders at the last minute. I just don't think we can achieve the level schedule that I understand JIT requires."

Al Simone (president and CEO): "Dave's got a point, Barry. I think one of our strong points has been that we're willing to respond quickly to customer demand even though we haven't always been able to do so because of parts shortages. In any case, with 20 different products and 200 possible varia�ons of those products, I think we're forced to s�ck with MRP. We're ge�ng some significant offshore compe��on that's offering lower prices than we are. I'm not sure I want to scrap a $1 million MRP system to try JIT."

Barry: "I don't think we have to scrap MRP. All I'm sugges�ng is that we con�nue using MRP for planning, but implement some aspects of JIT such as the kanban system. I also think we could benefit from changing to group technology. I've been looking at the bills of materials and rou�ngs. Even though we produce 200 different possible end items, we make those from only 50 different main parts, and many of those parts follow the same processing sequence. Part of our problem in controlling inventory has been tracking it through the long queues in the job shop. Group technology could simplify things for us."

1. Based on the informa�on given, would JIT be appropriate for Southern Gear? 2. Could JIT help to alleviate the problem of being unable to sa�sfy customer orders on short no�ce? 3. Is Barry Renter correct to suggest that MRP can be used in conjunc�on with JIT? If so, how would MRP func�on? 4. What addi�onal informa�on would you like to have before making a decision? 5. Which step should Southern Gear undertake first if it decides to implement JIT?

Steel Office Products

Steel Office Products makes four different types of steel filing cabinets: a 3-drawer le�er size, a 5-drawer le�er size, a 3-drawer legal size, and a 5-drawer legal size. The company currently uses the layout shown in the first illustra�on below to make these products. However, plans are under way to switch to JIT produc�on.

Each filing cabinet is assembled from three basic parts: cabinet, the drawers, and the guides on which the drawers slide, as shown in the second illustra�on below. All cabinets use the same guides. Both le�er-size cabinets use the same drawers, as do both legal-size cabinets. However, each product has its own cabinet.

Basic Parts for Filing Cabinet

The guides (two per drawer) have rollers (two per guide) on which the drawers slide. These rollers are purchased from an outside supplier, but all other component parts are made internally, using sheet steel that is purchased from a supplier. The sequence of processing opera�ons for each part is listed below. There is no difference in produc�on �mes between legal-size and le�er-size, or between 3-drawer and 5-drawer cabinets, but a set up must be performed each �me the switch is made from one to the other. The following tables show the opera�on sequence and the processing �me for each part in minutes per unit.

CABINET

Opera�on Set up Run

Shear 5 0.5

Press 60 1

Weld 20 3

Paint 45 3

DRAWER

Opera�on Set up Run

Shear 3 0.4

Press 50 0.8

Weld 10 2

Paint 45 1

GUIDES

Opera�on Set up Run

Shear 2 0.3

Press 20 0.5

Assemble 5 2

The plant operates five days per week, eight hours per day, and expects to con�nue this schedule. Weekly demand for the products is fairly constant at an average rate of 80 fivedrawer le�er-size units, 50 three-drawer le�er-size units, 40 five-drawer legal-size units, and 30 three-drawer legal-size units.

1. What mixed-model sequence should be used to con�nue this average? 2. What is the cycle �me for each product? 3. Based on these cycle �mes, will there be any problems with the processing �mes shown above? If so, what changes must be made? 4. Can you iden�fy any other changes that should be made to help implement JIT?

Discussion Ques�ons

Click on each ques�on to reveal the answer.

1. List the aspects of JIT that result from elimina�on of excess inventory. (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

The elimina�on of excess inventory provides a situa�on where any problem that disrupts the flow of work will become obvious to everyone as work centers must shut down for lack of materials. A�en�on is focused on a problem and all effort is devoted to solving that problem. However, because it is realized that if the problem recurs produc�on will be disrupted again, effort is devoted to a long-term problem solu�on. Thus problem-solving by employees and preven�ve maintenance are necessary components of JIT. Quality control is another important aspect in a JIT system. With JIT, poor quality parts become immediately apparent. Without a backup of batched parts, a defect will result in stopped produc�on. The person making the part will immediately become aware of the problem so correc�ve measures can be taken.

2. Which aspects of a fast-food restaurant are done just-in-�me? Which are func�ons similar to batch produc�on? (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

In many fast food restaurants sandwich prepara�on operates on a JIT system, preparing the sandwich as the customer orders it to their specifica�ons. Func�ons similar to batch produc�on include: chopping le�uce, slicing tomatoes, preparing salad bar items such as gra�ng cheese, cu�ng up cauliflower and green peppers.

3. In general, would you say that service organiza�ons operate in a just-in-�me mode? Why or why not? (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

In general a service organiza�on does operate in a just-in-�me mode. A service organiza�on's primary func�on requires the presence of the customer before it can be accomplished. For example, a physician's office is able to prepare examining rooms ahead of �me by checking supplies and cleanliness, but the func�on of administering the doctor's services cannot be done un�l the pa�ent is present.

4. Define a pull system and a push system, and explain their differences. (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

A push system is based on the idea that materials get pushed through the processing opera�ons based on a schedule. Under this system, an order to produce a part or product gets "launched" into the system at a scheduled �me and is pushed from one work center to another according to that schedule. Each successive work center usually has no idea whether the next work center really needs that order right away or not, but they keep pushing the material through anyway. In contrast, a pull system moves materials based on actual needs at successive work centers. The pull system concept actually starts with customer demand, which pulls finished products from the company. As those finished products are made, they pull the appropriate materials through processing. Materials and parts are also pulled from vendors and suppliers.

5. Develop a list of companies or industries that may best benefit from the results that JIT produces. (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

Those companies or industries that have repe��ve assembly opera�ons are generally most likely to benefit from JIT. Some examples are: automobile industry, electronics, furniture producers, motorcycle industry, power tool companies, and home appliance manufacturers. However, opera�ons that have a job shop process have started applying some of the JIT concepts with beneficial results. Elements of quality improvement and flexibility can be applied to service opera�ons such as healthcare.

6. Are there any companies or industries for which JIT would be totally inappropriate? Why? (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

Companies or industries that operate without any kind of repe��ve processing cycle, such as manufacturers of custom or specialized products, probably would not benefit fully from a JIT system. In par�cular the kanban system with p-cards and c-cards is designed for repe��ve produc�on. Without a produc�on process that is repe��ve, the company wouldn't know what materials are needed ahead of �me. However, some of the fundamental principles of just-in-�me including quality improvement efforts, system reliability, and opera�onal flexibility are valuable.

7. Explain the use of the C-kanban in a single-card system and the use of the C-kanban and the P-kanban in a dual-card system. (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

In a single-card system the C-kanban is used as an authoriza�on to move material. Thus, the C-kanban limits inventory because new parts and materials cannot be obtained from suppliers (either internally or externally) without one.

The one weak link in the single-card system is that producing work centers may not have a clear-cut signal to produce more. Thus, in a dual-card system, the P-kanban is added to authorize produc�on while the C-kanban is s�ll used to authorize only conveyance.

8. What are some ways a produc�on process can be simplified? Explain each. (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

Plant Layout – Simple flow pa�erns and machines in close proximity to one another can simplify a process. This allows part to move short distances and workers to spend more �me doing value-added work rather than walking or wai�ng.

Group Technology – By making families of parts or products with similar processing opera�ons, it is possible to simplify opera�ons.

Reduced Setup Times – With very low setup �mes it is possible to easily switch from making one part or product to another with li�le disrup�on of flow.

Total Preven�ve Maintenance – Once again, a process is simplified if a smooth flow can be maintained. This is done by ensuring that machines will operate as expected. Preven�ve maintenance ensures that the machines are properly adjusted and lubricated and that parts are replaced before they become likely to break.

9. Describe at least two ways that quality control is important in JIT. (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

The first way quality control is important is in elimina�ng waste. If defec�ve parts or products are produced then the labor and materials in them has been wasted. Second, defects disrupt the smooth flow of materials and, therefore, are to be avoided. A third aspect is that by collec�ng quality control data a company has informa�on it can use to constantly improve its produc�on process.

10. Find an ar�cle about a company outside Japan that uses JIT, and determine whether any modifica�ons have been made to fit local culture or business prac�ces. (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

The answer to this ques�on will depend upon the ar�cle found. In many cases, U.S. companies have made modifica�ons in JIT to fit local circumstances.

11. Discuss how the lean manufacturing concept of a value stream may relate to the water analogies of JIT. (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

There are similari�es. In both instances we are using the analogy of flowing water to represent undisrupted flow of materials and products. In both instances we also can think of pools (inventory) as being something that really does not contribute to a smooth flow. However, the value stream concept goes beyond the JIT water analogy to get us thinking about the fact that this stream can provide value for all those who are involved with it. Using this thinking we can begin focusing on how to maximize that value for everyone (suppliers, manufacturers, customer, etc.).

12. The term lean manufacturing appears to indicate that related ideas are not applicable to services. Is that true? (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

No, that is not true. Because JIT was first developed for manufacturing, the lean system concept naturally was applied to manufacturing first. However, just as JIT use has now extended to services, lean systems concepts are also now being applied widely in service opera�ons.

13. What is the rela�onship between strategic planning and JIT? (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

JIT offers some very special compe��ve opportuni�es to the company that uses it that allows the firm to improve its compe��ve posi�on. Within a well done strategic planning process, the firm a�empts to mi�gate its weaknesses or to transform them into strengths. The implementa�on of JIT or lean thinking is a way to help an organiza�on build its capabili�es, in many cases transforming weaknesses into strengths. Following are some of those opportuni�es: elimina�on of waste, produc�vity improvements, be�er people u�liza�on, cost reduc�on, quality and reliability improvements, product flexibility, volume flexibility, and delivery dependability.

14. Explain value stream mapping. (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644

Value stream mapping is a technique used to analyze the flow of materials, ideas, and informa�on to understand how processes func�on. Each ac�vity is defined as value added or not value added. Value stream mapping is useful for both manufacturing and service opera�ons. In service opera�ons it allows organiza�ons to understand how many different people and departments are involved, what their roles are, and how long things take. The basic steps are to:

• Iden�fy the product or service that should be mapped.

• Draw a rough current state value stream map, which shows the current steps, delays, and informa�on flows required to deliver the target product or service.

• Es�mate the cost and �ming at each point as well as the value added.

• Assess the current state value stream map to understand its flow and points where waste occurs to determine where the process can be improved.

• Create a future state value stream map using a team of people.

• Prepare a plan to implement these improvements.

• Work toward this future state.

Problems

1. A manufacturer of televisions produces three different models: X, Y, and Z. Demand over the next month is expected to be 400 units for model X, 200 units for model Y, and 100 for model Z. There will be 20 working days in the month. Develop a mixed-model sequence.

2. Refer to Problem One. Suppose that the company has eight working hours each day. Calculate cycle �mes for the three different television models. 3. An automobile manufacturer makes two-door sedans, four-door sedans, conver�bles, and sta�on wagons. Customer demand for the next 25 produc�on days is expected to be 400

two-door sedans, 300 four-door sedans, 300 conver�bles, and 200 sta�on wagons. Develop a mixed-model sequence that will level the assembly schedule and sa�sfy daily demand. 4. Refer to Problem Two. If the automobile manufacturer runs the plant seven hours each day, calculate cycle �me for each type of car.

Click here to see solu�ons to the odd-numbered problems. (h�ps://media.thuze.com/MediaService/MediaService.svc/constella�on/book/AUBUS644.13.2/{pdf}bus644_ch11_odd_problem_solu�ons.pdf)

Key Terms

Click on each key term to see the defini�on.

conveyance kanban (C-kanban) (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

A kanban that authorizes the movement of materials from one loca�on to another.

cycle �me (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

A measure of how quickly a product is made. It is the amount of �me from the start of a task un�l the worker or machine is ready to start the next task. In an assembly, it is the �me between the nth vehicle being produced and the nth+1 vehicle.

dual-card kanban system (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

A pull system that uses both C-kanban and P-kanban to carefully control WIP inventory.

just-in-�me (JIT) (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

Can be used as a basis for planning and scheduling, yet is more properly viewed as a strategy for designing manufacturing systems that are responsive to customer requirements. Applying JIT forces a re-examina�on of opera�ng philosophy. The JIT philosophy focuses on reducing lead �mes, reducing set-up �mes and improving product quality to minimize raw material, work-inprocess and finished goods inventory.

kanban (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

A Japanese word meaning "visible record." In manufacturing, it is a card or marker that is used to indicate when more materials are needed in a pull system.

lean systems (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

Lean systems extends many of the basic concepts of JIT over the en�re supply chain. While both lean systems and JIT can focus on elimina�ng non-value-added ac�vi�es from the en�re supply chain, lean systems focuses on applying the basic ideas of JIT to the en�re value stream.

level assembly schedule (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

A final assembly schedule that involves producing a specified sequence of products so that produc�on of each is matched with expected daily demand.

mixed-model sequencing (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

The produc�on of different products in small batches on the same equipment following a repea�ng cycle.

produc�on kanban (P-kanban) (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

A kanban that authorizes the produc�on of more parts in a pull system.

pull system (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

An approach to manufacturing in which materials are pulled through processing based on actual requirements for those materials.

push system (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

An approach to manufacturing that forces materials through processing based on a schedule.

set-up �me (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

The �me needed to prepare a machine to process a job.

single-card kanban system (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

A pull system that uses only the C-kanban. Actual produc�on may be scheduled using MRP.

total preven�ve maintenance (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

An approach to equipment maintenance that emphasizes preven�on of breakdowns, maintenance each day, and operator responsibility for maintenance.

value stream mapping (h�p://content.thuzelearning.com/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/sec�ons/cover/books/AUBUS644.13.2/

A technique used to analyze and design the flow of materials, ideas, and informa�on to understand how processes for making products func�on.